Rosneft expands in Middle East with Libya, Kurd deals
Russian companies and diplomats have been making inroads into several Arab countries
Rosneft, the state-run producer headed by a close adviser of Russian President Vladimir Putin, is expanding its footprint in the Middle East by striking new oil deals with Iraq’s Kurdish region and Libya.
Russia’s largest oil producer agreed to buy crude from Libya’s National Oil Corp. (NOC), the state-run NOC said on Tuesday on its website, without specifying the amount. The deal also provides for Rosneft to invest in exploration and production in the North African country. The Russian company announced on the same day it will buy Kurdish oil until 2019 and will study exploration and production opportunities in Kurdish areas, it said in a statement.
“These deals combine potentially good economics for Rosneft and good politics for the Kremlin,” Chris Weafer, a partner at Macro Advisory in Moscow, said on Tuesday by email. “Expect more deals from Rosneft in the Middle East and North Africa and across the developing world.”
Rosneft’s new deals in the region come as Russia asserts its political influence in the Middle East, Weafer said. The Russian producer, in which Qatar bought a holding in December, agreed in the same month to buy a $2.8 billion (Dh10 billion) stake in Eni SpA’s giant Zohr gasfield in Egypt. It’s also drilling its first exploration well at Block 12 in southern Iraq. Russian companies and diplomats have been making inroads in several Arab countries, reviving political, arms-trading and energy relationships.
Major power
Russia, which overtook Saudi Arabia as the world’s largest crude producer in December, has imposed itself as a major power in war-torn Syria and rebuilt strong links with Egypt. Putin has forged ties with Libyan military leader General Khalifa Haftar, who has been gaining ground against rivals in that divided nation.
Rosneft, mostly owned by the Russian government, has focused historically on its domestic business. The company’s largest overseas projects are in Venezuela.
For Libya, Rosneft’s involvement is part of a bigger push to encourage investments by foreign oil companies to help the nation increase its production to 2.1 million barrels a day by 2020, according to the NOC statement.
Rosneft’s press service declined to comment on the Libya deals when contacted by phone.
Libya currently produces about 700,000 barrels a day.
Organisation of Petroleum Exporting Countries agreed with other oil producers including Russia to reduce their collective output by 1.8 million barrels a day, starting January 1.
Libya was exempted from the cuts as its works to restore its oil industry.